[Reuters]

Published date: 9th May 1988

9 May 1988

Reuters News

English

(c) 1988 Reuters Limited

MANILA, May 9, Reuter – Thirsty Filipinos drank nearly a billion liters of San Miguel beer in 1987, boosting the food and beverage conglomerate’s profits to record levels and raising the stakes in long-running boardroom wrangles.

San Miguel Corporation Executive Vice President Ramon del Rosario told Reuters that beer sales, which contributed over half of total revenue, shot up by 40 per cent in 1987 to 126 million cases or 968 million litters.

Beer sales grew by more than 50 per cent in the first quarter this year, he said in an interview at the weekend.

“This year we expect to sell more than 150 million cases, probably closer to 160 million,” he said.

San Miguel, a pillar of the Philippine economy, accounts for over two per cent of the country’s gross national product.

The company heads into its annual meeting on Tuesday with no end in sight to a two-year-old battle over a 38.1 million block of shares. Several factions have put up a total of 38 candidates competing for 15 seats on the board.

The disputed shares represent a 31.3,per cent stake in San Miguel and are controlled by the United Coconut Planters Bank.

The shares were seized in April, 1986, by the Presidential Commission on Good Government on suspicion that they were owned by Eduardo Cojuangco, a close associate of former president Ferdinand Marcos. Cojuangco fled into exile with Marcos in February, 1986.

Other San Miguel shares directly owned by Cojuangco were also seized, boosting the commission’s stake to 51 per cent. At least year’s meeting the government commission took effective control of the 98-year-old company, snatching nine of the board seats.

An attempt by San Miguel to buy back the disputed shares from the bank was blocked by a suit filed before the Securities and Exchange Commission last year by Eduardo de los

Angeles, a good-government commission director. De los Angeles charged San Miguel was illegally using its resources to buy back the shares.

The SEC ruled against de los Angeles last week, but a new twist was introduced in the saga by Cojuangco, a former chairman of San Miguel and president of the Coconut Bank.

Del Rosario said Cojuangco had named nine candidates for election to the board, claiming in a Supreme Court suit that he had illegally been deprived of his majority control.

Despite the deadlock, the company is pressing on with ambitious expansion plans. President Francisco Eizmendi told institutional investors San Miguel would pour 6.2 billion pesos (297 million dollars) into expansion over 1988 and 1989.

By 1992, Eizmendi said, San Miguel’s plants and farms would grow from 33 to 70, its workforce would grow from 20,000 to 30,000, and its sales revenue was expected to triple.

Del Rosario said with beer sales growing rapidly, plans for a new brewery on Negros Island had been enlarged. “This year we have had to look for quicker ways of increasing our beer capacity. We’ve even had to bring in second-hand equipment.”

With a stranglehold on the domestic market, the company, which owns a Hong Kong brewery, is looking further afield. Del Rosario said San Miguel broke into the Taiwan beer market last year and set up an ice­ cream plant on the island. Taiwan sales were projected at half a million cases of beer this year.

At Tuesday’s meeting, the company will announce a 15 per cent stock dividend and a plan for staff to purchase up to four million new shares, del Rosario said.

“We are betting very heavily that the economy will continue to move forward,” he said. “We’re certainly putting our money where our mouth is.”